Practical Lesson In Financial Accounting

If you are a small business under 10M in sales revenue, you have the option of either using cash-based or accrual-based accounting. And if you’re in a business that has a high percent of Account Receivables, you’re better off using cash-based accounting. Why? Because you’re paying taxes upfront on income you won’t be receiving for another 90-120 days (depending on the payment terms you’re offering your customer).

My friend Vijyendra is a wholesale importer of stones from India. It is a very high-margin, but slow-growth business. He has been in business for about 3 years and is currently importing 1 container a month, half of which is pre-ordered stones. When he puts an order in for a container, he has pay his supplier within 30 days. However, he doesn’t get paid from his retailer till the stone has been etched and shipped to the end customer (90-120 days). To make matters worse, December is the busiest month (yes, among other good stuff people also buy and upgrade tombstones when they get their annual bonuses). So when it is time to close the books, he is showing zero payables and 25% receivables. Not good if your books are Accrual-based!

What Can Orkut Do For Your Love Life?

When I was India in January 2007, my friend Akshay Chikodi asked me if was on Orkut. Frankly, he said, if you’re not on Orkut you don’t exist! So I created a profile on Orkut.

Couple things I don’t get about Orkut:

• What is it trying to be – a social networking tool? dating site? First thing you create a profile, you see this message - Next steps: Are you single? Tell everyone what you are looking for to get orkut working for you!
• It looks like a developer’s prototype when compared to Facebook.

But obviously, it is definitely doing a few things right. Read Gautam’s post here, Alexa ranks Orkut second in India followed by Yahoo. Orkut on last count had over 57.4M users, 15% = 8.6M Indians on Orkut. Even though it seems a bit on the higher side, it nevertheless is a great tool for people search. People search online is catching on and I don’t think there exists a better database of Indians in India and abroad – profiles with real names, pictures, bios & interests, life/event updates and a listing of every other friend on Orkut.

Some Orkut demographics from here:

• Over 15% of Orkut profiles are Indians (Brazil on top with 55%, followed by US with 19% users).

• 70% users are between ages 18-30.

• less than 20% are either married or committed (42% no answer, 36% single)

• 65% are on Orkut for friends, 18% for dating

The last bit of info is very interesting. Given that a majority of users are between ages 18-30 and single, is Orkut big enough to challenge the hugely successful martrimonial and dating websites? Same for Facebook, can it be the end of Match.com and the likes? Why pay a premium for meeting other singles if you can “poke” or “send teasers” for no charge? Or is that too creepy for some users?

Orkut’s help section on “What can Orkut do for your love life?” here. If you’re on Orkut, I’d love to hear from you.

Majority of NYC sewer manhole covers “Made in India”

For all those proud New Yorkers that claim to know every bit about the city history, I can almost guarantee a good bar conversation. Here’s how it usually goes:

Q: How many years have you lived in the city?

A: Over 5 years

Q: How many miles do you walk each day?

A: About a mile or two

Q: Did you know a majority of NYC sewer manhole covers are imported from India?

A: No way! You’ve gotta be kidding me! Did this just happen?

Most of New York City’s 600,000 manhole covers and the many hundreds of thousands all over the US come from India. And foundries in and around Kolkata claim a big chunk of that business. Indian companies began supplying manhole and sewer access covers to the US almost four decades ago. But in recent times their business has gone up manifold as they charge only a third of what US makers demand for the same work.

Read more here and here.

Thomas Friedman redefines the flat world

I attented the Personal Democracy Forum last month.  New York Times columnist, Thomas Friedman, in his keynote announced the addition of 3 new chapters to this popular book “World is Flat” (3rd edition) . 

Mahatma Gandhi once said, “Be the change you want to see in the world”.  That was Gandhi’s message to 250+ million Indians, challenging them to organize and rise up against the British rule.

Thomas Friedman reading out his new chapter announced, “If it’s not happening, it’s because you’re not doing it”.  This is the new form of Citizen Activism in the age of Internet and Technology.  Users have all the necessary tools (read blogs, forums, feeds, widgets) to organize virtual campaigns and put pressure on the big corporations and governments.

Check out the recorded version of Friedman’s keynote here.

More on the flat world and this from the perspective of employers – Back in the days, people wrote and presented their resume as a proxy of who they’re.  Today, companies can go on the internet and gather the information themselves.  The human proxy has been dropped and entities are more transparent.

Web2.0 in the enterprise

Web 2.0 is all about the transition from individual productivity (user running MS office locally) to group productivity (collective document generation & editing – forums & wikis).

Enterprise Web 2.0 benefits:

• Less email costs (increased use of blogs, wikis)
• Search benefits (document collection and archive)
• Easier updates/patches (central update as opposed to mass desktop updates)
• More transparency (this should in fact be first on the list of benefits).

When organizations don’t provide employees the necessary tools, they go out to get them thus violating company policy. A good example is employees using Yahoo mail and Gmail for storing and forwarding big company confidential documents since corporations have a 100MB mailbox limit.

P.S. Google Docs is the currently the second biggest money maker for Google after Adsense. Maybe that’ll change soon with the introduction of ads in Youtube.

Death of the Newspaper?

Livmint has published two articles that have contradictory headlines – first about readers, advertisers and analysts abandoning newspapers and second about the increase in newspaper circulation.

The panelists and participants at the Web 2.0 Expo had no doubts in their mind – the Internet was killing the newspaper, and the newspaper readers are a dying breed.

Some of my takeaways from the conference:

How Web 2.0 is owchanging traditional media?

• New Publishing – focus on aggregation & curation of content of a niche audience
• Reduced acquisition cost for content generators & editors.
• Guerilla marketing (PR, link swapping & viral marketing) as opposed to brand advertising.

For all those MSM firms hoping Web2.0 is their way out of this slump:

• Not everyone can be a content aggregator, it’s a fast-paced, “winner takes most” marketplace.

From the makers of the ubiquitous Stag umbrella

Fast Company has an interesting write up on the change in strategy by the makers of the Stag umbrellas. If you’re from Mumbai, you need no further introduction to the ubiquitous, black Stag umbrellas and the reasons to own one.

Threatened by cheaper products from China, the company switched from a low cost strategy to differentiation – offering specialized, high-quality products. The timing couldn’t be any better, the Indian consumer can definitely afford a premium on personalized umbrellas. On the other hand, corporates will be more than happy to give out branded umbrellas for free.

Imagine India: Macy’s brings Lord Ganesha to SFO

Walking around Union Square in San Francisco, I was surprised to see a huge Lord Ganesha sitting on top of the Macy’s sign. Apparently, the SFO Union Square Macy’s has a flower show every year. The theme for their 61st annual Flower show was “Imagine India”.

They got it mostly right – 20 feet Ganesha in front, windows decorated, lots of silk and Indian cotton apparels in the store, and of course the Indian tricolor fluttering on top of the store. You wonder what’s the business incentive – it wasn’t additional foot traffic. Cultural capital, maybe?